Heightened tensions between Israel and Iran, following a series of direct retamilitary strikes, have sent ripples of concern through global oil markets.
On Friday, global oil prices saw their highest single-day gain of over 8%.
But that’s not all.
There is another layer of concern that has come into the picture since Friday. Blockade of the Strait of Hormuz.
Iran is threatening to block the vital chokepoint, through which a significant portion of the world’s oil supply transits.
While Tehran’s past threats to close the maritime corridor in response to Western pressure have always failed to materialise, can the oil and gas-rich nation summon the gut to do it this time?
Following the latest escalation, which began early Friday, June 13, 2025, with Israel’s so-called ‘preemptive’ widespread strikes against Tehran, the latter has vowed a “powerful and decisive” retaliation.
The Israeli attacks reportedly targeted Iran’s nuclear infrastructure, ballistic missile capabilities, and military commanders.
Despite the severity of the Israeli strikes, the National Iranian Oil Refining and Distribution Company said that its oil refining and storage facilities remained undamaged and fully operational.
However, the potential for disruption to oil flows remains a significant existential concern given this latest threat by Iran to block the Strait of Hormuz.
How important is the Strait of Hormuz?
The Strait of Hormuz is a narrow yet strategically critical waterway located between Iran and Oman.
Controlled largely by Iran, it links the Persian Gulf (north of it) with the Gulf of Oman in the south, extending onward to the Arabian Sea.
At its narrowest point, the strait is 33 kilometres wide (that’s nearly four times the height of Mount Everest) with the shipping lane itself limited to just three kilometers in either direction.
Energy analysts widely recognize the Strait as a crucial oil transit corridor, linking major crude producers in the Middle East with key markets worldwide.
Data from the US Energy Information Administration (EIA) show an average of 21 million barrels of oil were shipped through the Strait daily in 2022, representing roughly 21% of the global crude trade.
Any blockade to oil flows through this major choke-point, even temporarily, could significantly drive up global energy prices, inflate shipping costs, and cause substantial supply delays.
What oil industry experts are saying
For many energy experts, a blockade or significant disruption to flows via the Strait of Hormuz is considered a “worst-case scenario” that could push oil prices far above $100 a barrel.
Data from Vortexa indicates that between 17.8 million and 20.8 million barrels of crude, condensate, and fuels flowed through the strait daily throughout 2022.
Major OPEC members–Saudi Arabia, Iran, the UAE, Kuwait, and Iraq–export the majority of their crude through this waterway, with Asia being the primary destination.
Recognizing this vulnerability, Saudi Arabia and the UAE have since begun exploring alternative pipeline routes to bypass the strait.
But whether or not that has been effective is a headline for another day.
The EIA noted in June 2024 that approximately 2.6 million barrels per day of unused capacity from UAE and Saudi Arabian pipelines could circumvent Hormuz.
Meanwhile, Qatar, one of the world’s largest gas exporters, sends nearly all its LNG shipments through the Strait of Hormuz. This makes the Iranian threat a big concern for it.
Does the threats indicate a concern for Western countries?
Iran has threatened to block the Strait of Hormuz on several occasions over the years, including in January 2012 in retaliation for US and European sanctions. However, it has never fully executed such a move.
This could be perhaps because commercial shipping in the area is notably protected by the Bahrain-based US Fifth Fleet.
But who will be the most hit if Tehran dares to block the Strait?
Data shows that most of the oil that leaves Hormuz goes to Asia, not Western nations anymore.
In the 1970s Western nations were the primary buyers of Arab oil but there’s been significant oil-related geopolitical maneuvers since then.
One of those maneuvers was the Arab Oil Embargo of 1973, where Saudi Arabia-led oil producers from the Gulf region imposed an oil embargo on Israel’s Western supporters including the US, UK and others.
The Gulf states took that decision as a show of solidarity with Egypt who at the time was in a war with Israel. The October 1973 Yom Kippur War!
But Iran’s potential blocking of the Strait won’t hurt the West as much anymore, as it would Asian countries like China, India and others in the Southeast Asia region.
The US has more than doubled its petroleum production over the past two decades, now standing tall as one of the world’s largest oil and gas exporters.
Similarly, Europe has significantly divested from oil into clean or renewable energy sources.
Nevertheless, there is no doubt that the support of the US is most needed in resolving this escalating conflict between Iran and Israel.
For one, White House gave Prime Minister Benjamin Netanyahu the green light to conduct those strikes on Iran.
Second, most of the air defense systems that helped Israel downed Iranian retaliatory missiles reportedly originated from the US.
Third, as a nuclear power and close ally of Israel, the US can change the course of this conflict if President Trump so wishes.